Support and resistance means price of a stock will tend to stop and reverse at certain predetermined price levels in other words we can say that support is an area from where price of stock is expected to move in up side. and resistence is an area from where price of any stocks is expected to go down side. support and resistence can be calculated for differenet time frame with the help of different tools and different indicators. we will discuss it later,
what is support:
Support levels tend to stop price from falling below a specific point. in other word we can say that support is something that prevents the price from falling further.The Support level will be always below the current market price.
What is Resistance:
Resistance levels act like a price ceiling that price cannot break above. in other word we can say that resistance is something which stops the price from rising further.The resistance level will be always above the current market price.
so we can safely conclude that traders should buy at support and sell at resistence but it has to be done after confirmation as technicals always says everything needs to be confimed.
Types of Support and resistence..,
1. Camarilla Pivot Points
2. Standard Pivot Points
3. Woodie's Pivot Points
4. Demark Pivot Points
5. Classic Pivot Points
1. Camarilla Pivot Points
The Camarilla method was developed by Nick Stott who was a very successful bond trader.
To calculate Camarilla Pivot points all you need is previous trading day’s high low and close value. Below are the equations for calculation various levels.
C = Previous day close
H = Previous day high
L = Previous day low
H4 = [0.55*(H-L)] + C
H3 = [0.275*(H-L)] + C
H2 = [0.183*(H-L)] + C
H1 = [0.0916*(H-L)] + C
L1 = C – [0.0916*(H-L)]
L2 = C – [0.183*(H-L)]
L3 = C – [0.275*(H-L)]
L4 = C – [0.55*(H-L)]
How to calculate Camarilla Pivot points and how to take trades on these levels:
Camarilla equations take previous day’s high, low and close as input and generates 8 levels of intraday support and resistance based on pivot points. There are 4 levels above pivot point and 4 levels below pivot points. The most important levels are L3 L4 and H3 H4. H3 and L3 are the levels to go against the trend with stop loss around H4 or L4 . While L4 and H4 are considered as breakout levels when these levels are breached its time to trade with the trend.
============
2.Standard Pivot Points
R3 = H + 2( Pivot - L
R2 = Pivot + ( H - L )
R1 = ( 2 x Pivot ) - L
Pivot = ( H + L + C ) / 3
S1 = ( 2 x Pivot ) - H
S2 = Pivot - ( H - L )
S3 = L - 2( H - Pivot )
Buy when price move above pivot and R1,R2,R3, will be target
Sell when price move below Pivot S1,S2,S3 will be target.
=======================
3.Woodie's Pivot Points
R2 = Pivot + ( H - L )
R1 = ( 2 x Pivot ) - L
Pivot = ( H + L + 2 x C ) / 4
S1 = ( 2 x Pivot ) - H
S2 = Pivot - ( H - L )
Buy when price move above pivot and R1,R2, will be target.
Sell when price move below Pivot S1,S2 will be target.
=================================
4.Demark Pivot Points
If Close < Open Then Price = H + 2 x L + C;
If Close > Open Then Price = 2 x H + L + C;
If Close = Open Then Price = H + L + 2 x C;
R1 = Price / 2 - L
S1 = Price / 2 - H
Buy when price move above pivot and R1 will be target.
Sell when price move below Pivot S1will be target.
Demark can be also used for expected high and low of stock price at opening time of market.
=================
5.Classic Pivot Points are:
R4 = R3 +(HIGH-LOW)
R3 = R2 + (HIGH-LOW)
R2 = PP + (HIGH-LOW)
R1 = (2 * PP) - LOW
PIVOT POINT = (HIGH + LOW + CLOSE) / 3
S1 = (2 * PP) - HIGH
S2 = PP - (HIGH-LOW)
S3 = S2 - (HIGH-LOW)
S4 = S3 - (HIGH-LOW)
Buy when price move above pivot Point and R1,R2,R3,R4will be target
Sell when price move below Pivot Point S1,S2,S3,S4 will be target.
In each pivot points , if price closes above or below any level then it changes and support becomes resistence and resistence becomes support for exapmle if price moves above pivot level then R1 will act as resistence and pivot level will act as support , if price closes above R 1 level then R2 will act as resistence and R1 will act as support so finally it can be conclude that support becomes resistance and resistence become support as price movement.
what is support:
Support levels tend to stop price from falling below a specific point. in other word we can say that support is something that prevents the price from falling further.The Support level will be always below the current market price.
What is Resistance:
Resistance levels act like a price ceiling that price cannot break above. in other word we can say that resistance is something which stops the price from rising further.The resistance level will be always above the current market price.
so we can safely conclude that traders should buy at support and sell at resistence but it has to be done after confirmation as technicals always says everything needs to be confimed.
Types of Support and resistence..,
1. Camarilla Pivot Points
2. Standard Pivot Points
3. Woodie's Pivot Points
4. Demark Pivot Points
5. Classic Pivot Points
1. Camarilla Pivot Points
The Camarilla method was developed by Nick Stott who was a very successful bond trader.
To calculate Camarilla Pivot points all you need is previous trading day’s high low and close value. Below are the equations for calculation various levels.
C = Previous day close
H = Previous day high
L = Previous day low
H4 = [0.55*(H-L)] + C
H3 = [0.275*(H-L)] + C
H2 = [0.183*(H-L)] + C
H1 = [0.0916*(H-L)] + C
L1 = C – [0.0916*(H-L)]
L2 = C – [0.183*(H-L)]
L3 = C – [0.275*(H-L)]
L4 = C – [0.55*(H-L)]
How to calculate Camarilla Pivot points and how to take trades on these levels:
Camarilla equations take previous day’s high, low and close as input and generates 8 levels of intraday support and resistance based on pivot points. There are 4 levels above pivot point and 4 levels below pivot points. The most important levels are L3 L4 and H3 H4. H3 and L3 are the levels to go against the trend with stop loss around H4 or L4 . While L4 and H4 are considered as breakout levels when these levels are breached its time to trade with the trend.
============
2.Standard Pivot Points
R3 = H + 2( Pivot - L
R2 = Pivot + ( H - L )
R1 = ( 2 x Pivot ) - L
Pivot = ( H + L + C ) / 3
S1 = ( 2 x Pivot ) - H
S2 = Pivot - ( H - L )
S3 = L - 2( H - Pivot )
Buy when price move above pivot and R1,R2,R3, will be target
Sell when price move below Pivot S1,S2,S3 will be target.
=======================
3.Woodie's Pivot Points
R2 = Pivot + ( H - L )
R1 = ( 2 x Pivot ) - L
Pivot = ( H + L + 2 x C ) / 4
S1 = ( 2 x Pivot ) - H
S2 = Pivot - ( H - L )
Buy when price move above pivot and R1,R2, will be target.
Sell when price move below Pivot S1,S2 will be target.
=================================
4.Demark Pivot Points
If Close < Open Then Price = H + 2 x L + C;
If Close > Open Then Price = 2 x H + L + C;
If Close = Open Then Price = H + L + 2 x C;
R1 = Price / 2 - L
S1 = Price / 2 - H
Buy when price move above pivot and R1 will be target.
Sell when price move below Pivot S1will be target.
Demark can be also used for expected high and low of stock price at opening time of market.
=================
5.Classic Pivot Points are:
R4 = R3 +(HIGH-LOW)
R3 = R2 + (HIGH-LOW)
R2 = PP + (HIGH-LOW)
R1 = (2 * PP) - LOW
PIVOT POINT = (HIGH + LOW + CLOSE) / 3
S1 = (2 * PP) - HIGH
S2 = PP - (HIGH-LOW)
S3 = S2 - (HIGH-LOW)
S4 = S3 - (HIGH-LOW)
Buy when price move above pivot Point and R1,R2,R3,R4will be target
Sell when price move below Pivot Point S1,S2,S3,S4 will be target.
In each pivot points , if price closes above or below any level then it changes and support becomes resistence and resistence becomes support for exapmle if price moves above pivot level then R1 will act as resistence and pivot level will act as support , if price closes above R 1 level then R2 will act as resistence and R1 will act as support so finally it can be conclude that support becomes resistance and resistence become support as price movement.
No comments:
Post a Comment